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Navigating Immigration Reform: Employer Solutions for Practicable, Effective Reforms

H-1B Visas

Issue

The H-1B is a temporary visa available to highly educated foreign professionals who hold at least a bachelor’s degree or its equivalent and who have an offer to work in a specialty occupation. Countless studies have shown the incredible value these professionals bring to the U.S. workforce, but this visa remains a hot topic in the immigration debate. Arbitrary caps, along with system inefficiencies, make it difficult for U.S. employers to obtain the H-1B visas they need (see Figure 1). U.S. innovation and job creation will continue to suffer without common sense reform to this important visa.



Solution

U.S. employers know their business and workforce needs best. While Congress should ideally eliminate the arbitrary H-1B visa cap and allow the market to determine our H-1B supply, there are more limited solutions that can improve employer access to this group of professionals. A full range of solutions that the 114th Congress can pass includes:

  • Creating a market-based escalator H-1B cap that responds to demand so that employers are not “looked over” for an entire year.

  • Increasing the 20,000 H-1B cap for U.S. advanced degrees to keep those educated in our universities here.

  • Providing “dual intent” to U.S. advanced degree graduates who have a job offer by enabling this group to apply directly for green cards. More visas would be available to those H-1Bs that are truly temporary and do not seek permanent residence.

  • Allowing H-1Bs, along with E, L and O visa holders, to once again domestically revalidate their visas so they are not forced to sit abroad.

  • Providing all H-1B spouses and partners work authorization.

Additionally, the many fees associated with an H-1B visa should be reasonable and strictly used to improve immigration services and competitiveness, and expand the domestic worker pipeline by providing grants related to science, technology, engineering and mathematics (STEM) education programs.

“This year, as the H-1B cap season wrapped up, we ended up with 23 foreign nationals whom we cannot hire or retain. Ten of those are in the United States. They were hired within the last year or so, and we don’t have any option. They did not win the lottery. We will not be able to retain them. These are our H-1B casualties.”
- Denise Rahmani, Director, U.S. Immigration, Oracle, June 2014 

Background

H-1B Professionals Are Highly Educated Job Creators and Innovators

U.S. employers are committed to hiring and training Americans for the jobs of today and tomorrow. Nonetheless, the H-1B visa remains an important tool in their workforce strategy.

H-1B visa holders are highly educated professionals. According to U.S. Citizenship and Immigration Services (USCIS), more than 50 percent of approved H-1B visa holders have a master’s degree, Ph.D. or professional degree (see Figure 2). Many of them obtained these degrees from U.S. universities. While the number of foreign students has grown and the world’s economy has evolved, the H-1B visa remains essentially the same as when it was established in 1990. Just 65,000 H-1B visas are available annually with an additional 20,000 available to advanced-degree graduates of U.S. universities. This annual flow of new H-1Bs is equal to just .087 percent of the U.S. labor force but is critical to competitiveness.[i]



H-1B visa holders complement U.S. workers with different skill sets and education levels, and they help grow the U.S. workforce.[ii] It was estimated during the 113th Congress that if the Senate bill S. 744 had become law, H-1B expansion would have increased U.S. employment by 227,000 jobs in 2014, with a net increase of 1.3 million jobs by 2045.[iii]

H-1B scientists, engineers, doctors, teachers and mathematicians advance American innovation and are critical to many industries that are important to U.S. economic growth, including biotechnology, education, energy, health care and high tech. More than half of all 303,000 patent grants in 2013 were to noncitizens of foreign origin.[iv] These are individuals we want here in America yet we put H-1B roadblocks before them and others like them.

“Foreign students who graduate from American universities should be eligible to work in the U.S. permanently. The cap on visas for skilled workers should be removed; and let’s make it much easier for promising entrepreneurs to work and create jobs in the U.S. I know many in the business community are ready to get behind real immigration reform.”
- Lloyd C. Blankfein, Chairman and CEO, The Goldman Sachs Group Inc., Wall Street Journal, November 2012

Employers Need Certainty and History Shows the Market Knows Best

Employers need predictability in the H-1B system to plan for their workforce needs. Whether it is the certainty that comes from immediate access to global talent when a contract is won, or the assurance that the best and brightest talent will be able to join the employer in the next five to 10 years — ready access to talent is critical. Unfortunately, today’s H-1B cap does not provide predictability. It has been reached every fiscal year since 2004, and in recent years has been exhausted in the first week of filing — before the fiscal year even begins triggering random lotteries to determine who gets hired and which projects move forward. America’s economy deserves better.

Historical H-1B data demonstrate that arbitrary caps have no relation to demand which fluctuates with the economy. When the cap was at its highest level of 195,000 visas from 2001-2003, use ranged from under 80,000 to a high of 163,600 visas.  The fiscal year 2015 cap was reached in mere days, with 172,500 petitions filed for 85,000 visas. This triggered a random lottery with fewer than half the needed workers obtaining visas (see Figure 3). Some employers reported “losing” the lottery for more than half of the workers they submitted, forcing them to change business plans, relocate work abroad or terminate the employees. It is expected the fiscal year 2016 cap will also be met with extraordinarily high demand. At a time when our economy needs innovators, we must provide employers the visas they need to get the job done.



“We’re not talking about big numbers. At Lilly — a top ten global pharma company — we currently employ a grand total of 230 people in the U.S. on H-1Bs and other temporary visas … that’s about 1 percent of our U.S. employee population. Yet those folks are vitally important. They account for a significantly larger percentage of our senior-level scientific workforce … and they make vital contributions that otherwise would not be made."
- John Lechleiter, Chairman, President and CEO, Eli Lilly and Company, “Lifespans and Livelihoods: The Human Dimensions of Medical Innovation” speech, January 2010

H-1B Visas Help America Keep Educated World Talent

While the H-1B visa may be used for temporary work purposes, it is often a critical step for an employer to sponsor a talented foreign-born graduate of an American university for legal permanent residence. Under current law, foreign students graduating from U.S. universities are not permitted to have the intent to immigrate and experience difficulty applying directly for a green card upon graduation. Granting “dual intent” to foreign students who earn a U.S. advanced degree and have a job offer would allow these students to apply directly for a green card without needing the H-1B visa. This assumes that a green card is available and can be processed in a timely manner, something that is not a reality today. By stapling a green card to a diploma we would attract and retain even more talent from around the world.

H-1B Professionals Are Not Less Expensive Substitutes for U.S. Professionals

Hiring an H-1B professional is an expensive process. It can cost more than $9,000 in fees just to make an initial H-1B hire, and well over an additional $7,000 to transition an H-1B holder to a green card. By law, H-1B employees must receive the same wages, benefits and working conditions as U.S. workers. Employers are required to file a labor condition application to attest they will pay the higher of the actual or prevailing wage to all workers with similar experience and qualifications for the position. H-1Bs are sophisticated, know their market value and are able to change employers if they are not happy with their pay or position. It has been found that areas with higher rates of immigration have higher wages for native workers because immigration leads to greater specialization and productivity.[v]

In fact, for every percentage point increase in the rate of H-1B science, technology, engineering and mathematics employment, wages for native college graduates grew by 7 to 8 percent, and wages for native non-grads grew by 3 to 4 percent.[vi] These highly skilled workers are in such demand that Microsoft issued a proposal in 2012 to pay additional fees to guarantee access to an additional 20,000 H-1B visas for those who graduate with a U.S. STEM degree.[vii]

Employers Contribute to H-1B Fraud Detection and Prevention

Since 2005, it is estimated that U.S. employers have paid more than $1 billion in fees to fund government anti-fraud efforts in relation to H-1B and L-1 visas.[viii] All employers are required to pay a $500 anti-fraud fee with each new petition. This money has been used to increase the number of onsite investigations and audits of H-1B employers in recent years.

In fiscal years 2010 and 2011, USCIS conducted approximately 30,000 total onsite audits of employers of H-1B visa holders. Employers cooperate with these investigations and, in fiscal year 2010, just 1 percent of the site visits resulted in referrals for fraud investigations.[ix] Nonetheless, CFGI members report receiving numerous H-1B site visits even when there is no suspicion of a violation.[x] The government should focus its time on employers who are not complying with our country’s immigration laws and recognize those employers that have demonstrated compliance over a period of time.

Administrative and Congressional Support

Pursuant to executive action a final rule to grant work authorization to certain H-1B spouses was issued in February 2015. In addition the executive action may clarify which employers qualify as H-1B cap-exempt an issue causing confusion in the higher education and non-profit communities. While these are important steps, employers need broader and more permanent reforms.

Bills in the 113th Congress would have implemented a market-based escalator cap, increased the overall caps and provided dual intent to U.S. advanced degree graduates who have a job offer. At the same time, other proposals were advanced that would have been counterproductive. A proposed new wage system would have required employers to pay an H-1B worker more than a similarly situated U.S. counterpart, while a requirement to recruit U.S. workers would have resulted in significant delays and unpredictability.

H-1Bs are an invaluable asset to U.S. employers and America. Not only are they highly educated, but they have also proven to help create U.S. jobs, complement the domestic workforce and innovate for our employers, all of which contribute to our economic growth. Ideally, a market-based escalator cap should be enacted so as to not limit these benefits to the economy.

“This year we were unable to get H-1B visas for roughly one quarter of the cases we filed. Of this group, four employees with advanced degrees lost out on their third bite at the apple. These foreign nationals are absolutely critical to the company and our business is damaged when we are unable to retain these talented individuals."
- Margie Jones, Secretary, CFGI; and American Immigration Manager, Intel Corporation, June 2014

Download this information as a PDF.


[i] U.S. Citizenship and Immigration Services, “Characteristics of H-1B Specialty Occupation Workers,” Fiscal Year 2012 Annual Report to Congress, October 1, 2011 - September 30, 2012, http://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/H-1B/h1b-fy-12-characteristics.pdf

[ii] Competitive Enterprise Institute, “H-1B Visas: A Case for Open Immigration of Highly Skilled Foreign Workers,” October 2010, http://cei.org/sites/default/files/Alex%20Nowrasteh%20-%20H1-B%20Visas.pdf

[iii] Regional Economic Models Inc., “Key Components of Immigration Reform: An Analysis of Economic Effects of Creating Pathway to Legal Status, Expanding High Skilled Visas & Reforming Lesser Skilled Visas, July 17, 2013, http://blog.itic.org/blog/badgering-congress-onthe-economic-urgency-of-immigration-reform

[iv] Jeremy Quittner, “Foreigners Hold Half of All U.S. Patents Annually,” April 2014, http://www.slate.com/blogs/moneybox/2014/04/10/american_innovation_immigrants_hold_half_of_all_u_s_patents_annually.html

[v] Giovanni Peri, “The Effect of Immigrants on U.S. Employment and Productivity,” Federal Reserve Bank of San Francisco, August 2010, http://www.frbsf.org/publications/economics/letter/2010/el2010-26.html

[vi] Giovanni Peri, Kevin Shih, Chad Sparber, “Foreign STEM Workers and Native Wages and Employment in U.S. Cities,” National Bureau of Economic Research, May 2014, http://www.nber.org/papers/w20093

[vii] Microsoft, “A National Talent Strategy: Ideas For Securing U.S. Competitiveness and Economic Growth,” September 27, 2012, http://news.microsoft.com/download/presskits/citizenship/msnts.pdf

[viii] National Foundation for American Policy, “H-1B Visas Essential to Attracting and Retaining Talent In America,” May 2013, http://www.nfap.com/pdf/NFAP%20Policy%20Brief%20H-1B%20Visas%20May%202013.pdf

[x] Council for Global Immigration, “Question of the Week: FDNS Site Visits,” January 30, 2014, http://www.councilforglobalimmigration.org/QOW_01272014

 

 

 


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As strategic affiliates, the Council for Global Immigration (CFGI) and the Society for Human Resource Management (SHRM) help advance U.S. growth, innovation and job creation by supporting employers and their employees as they navigate the most pressing workforce and talent management issues, which includes reform of the U.S. immigration system. Learn more about ACIP at www.councilforglobalimmigration.org. Learn more about SHRM at www.shrm.org.

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